Management of Entrepreneurial Innovative Research
The Roots of the Concept of Entrepreneurship
In the middle-ages, an entrepreneur referred to an actor or people responsible for managing large-scale projects, this included anyone in charge of great architectural works: Churches, Public Building etc. This provided the basis for the concept of entrepreneurship, encompassing business set up and development, especially with the intention of profit making. The introduction of the concept of risk when describing entrepreneurial activity did not come about until the 17th century.
In the 1700’s the economist Richard Cantillon ( 1680’s-1734, IRELAND) was one of the developers of the early theories of Entrepreneurship. Some writers in fact suggest that he was the founder of the term, as used in his Essai Sur La Nature de Commerce en Genera (Published in 1755, twenty one years after his death). In the essay, Cantillon talks about a farmer who is faced with the uncertainty of the eventual market price of the crops produced on his farm when it comes time to harvest, despite being knowledgeable of the input costs required to grow the crops. The people described by Cantillon are not necessarily innovative, they simply organise the means of production under conditions that are uncertain and are thus engaging in risk taking.
Entrepreneur as a risk taker. Buy at a certain price and sell at an uncertain price – there is the element of risk.
In the 18th century those with capital were differentiated from those without. The former being the venture capitalists, the latter may very well have had the ideas. This was the era of Industrialisation – people were innovating but were unable to finance their inventions.
Jean Baptiste Say ( 1767-1832) is regarded as the one who popularised the works of Adam Smith (1723-1790), deemed to be the father of economics. Say attributed Britains’ success in industrial development to the ” wonderful practical skills of her entrepreneurs”. Say was one of the first economists to have the insight to suggest that the value of a good derived from its utility to the user and not from the labour spent in producing it. A description which also perfectly describes the modern-day marketing philosophy – so some things just don’t change!
In describing the individual characteristics of entrepreneurs, Say goes further than Cantillon: “they cannot simply be aware of the costs of inputs and the organisation of factors of production” They must also be able to deal with financial markets, markets for raw materials, production plant and equipment, as well as labour and premises, relevant legislation and taxation. Says’ description of the entrepreneur can be applied in todays’ marketplace, but there is one ingredient still missing – for his entrepreneurs there was little/no creativity involved, there is little difference about what it is they were producing.
In the 19th and early 20th centuries entrepreneurs were not distinguished from managers and were often viewed from an economic perspective. They did not have to invent anything, only be competitive with available resources.
From the mid-20th century, the Entrepreneur as an innovator was born. The entrepreneur was now seen as one who reformed or revolutionised patterns of production by exploiting an invention or untried technology, possibly producing a new commodity, or re-developing an old one in a new way. The entrepreneur was now associated with Innovation and “Newness”.
Joseph Schumpeter (1883-1950) was very much focused upon the differences, uniqueness, innovation and change that were central to the discussion of what constituted an entrepreneur. He was of the opinion that once the factors of production were combined in new exciting creative ways, we had entrepreneurial activity. When this was done, the entrepreneurial activity was over. They become part of the status quo, and thus are not entrepreneurial.
Harvey Leibenstein (1922-1994) suggested that what determines the entrepreneur from others is the ability to spot an opportunity in the marketplace before others, and having found that gap, fill it and make profit.
Definition of Entrepreneurship: The Debate
Lumsdain and Blinks suggest that the debate as to how we are to define entrepreneurship revolves around three main claims:
Any risk taker is an entrepreneur. The problem here is that this is too general a definition, as it fails to discriminate between those who administer traditional economic processes and those who are agents for change.
Entrepreneurs are reactive. They facilitate change because they spot a gap/an opportunity in the market. They are involved with change, but do not cause it, they seize upon an opportunity, rather than create anything.
Entrepreneurs cause economic development through change. They are seen as entrepreneurial when engaged in change activity, but cease to be so once change has been established.
The ability to innovate is an ability which distinguishes human beings from other creatures. The ability to innovate has always been there down through the ages, the tools available to do so is all that’s really changed. Think of the Pyramids, Newgrange, Apollo 11 and the Moon landing, the wheel, the Internet, Roman Aquaducts, to more recent advances in nano-technology.
Definition/Characteristics of an Entrepreneur
- The organisation and reorganisation of society and economic mechanisms and situations to his/her benefit, and society as a whole
- One who takes an initiative
- S/he accepts risk as an inherent part of what s/he does.
- One who creates something different and something that is needed.
- One who accepts the costs: financial, emotional, psychic.
- Accepts the “failures” and the successes in equal measures
What Is Entrepreneurial Research?
The purpose of Entrepreneurial Research is to gather information from multiple fields (company, industry, finance, market/consumer behavior, and trademarks/patents) in order to create new economic development or innovations. Entrepreneurial Research is also helpful for founders and investors to understand the idea behind a product, and what methods can be applied in order to provide support. Having this information can determine if the idea is viable and how to achieve success.
The following categories are helpful framing for entrepreneurial research. For a full description of each visit the research categories page.
- Company Research – Financial information, brand histories, media attention, news, strategies, and company performance
- Industry Research – Industry competition, target audiences, trends, finances, and statistical data
- Target Market Research / Consumer Behavior – Demographics, psychographics, geographical differences, and communication strategies
- Finance / Venture Capital – Angel groups and business news / research
- Trademarks / Patents – Trademark law, patent law, and information about regulated products and activities
Introduction to the Research Project
Discussion on Effective Project Management
Read the case study and answer the relevant questions.
CASE STUDY 1
Macon was a fifty-year-old company in the business of developing test equipment for the tire industry. The company had a history of segregated departments with very focused functional line managers. The company had two major technical departments: mechanical engineering and electrical engineering. Both departments reported to a vice president for engineering, whose background was always mechanical engineering. For this reason, the company focused all projects from a mechanical engineering perspective. The significance of the test equipment’s electrical control system was often minimized when, in reality, the electrical control systems were what made Macon’s equipment outperform that of the competition. Because of the strong autonomy of the departments, internal competition existed. Line managers were frequently competing with one another rather than focusing on the best interest of Macon. Each would hope the other would be the cause for project delays instead of working together to avoid project delays altogether. Once dates slipped, fingers were pointed and the problem would worsen over time. One of Macon’s customers had a service department that always blamed engineering for all of their problems. If the machine was not assembled correctly, it was engineering’s fault for not documenting it clearly enough. If a component failed, it was engineering’s fault for not designing it correctly. No matter what problem occurred in the field, customer service would always put the blame on engineering.
As might be expected, engineering would blame most problems on production claiming that production did not assemble the equipment correctly and did not maintain the proper level of quality. Engineering would design a product and then throw it over the fence to production without ever going down to the manufacturing floor to help with its assembly. Errors or suggestions reported from production to engineering were being ignored. Engineers often perceived the assemblers as incapable of improving the design. Production ultimately assembled the product and shipped it out to the customer. Oftentimes during assembly the production people would change the design as they saw fit without involving engineering. This would cause severe problems with documentation. Customer service would later inform engineering that the documentation was incorrect, once again causing conflict among all departments. The president of Macon was a strong believer in project management. Unfortunately, his preaching fell upon deaf ears. The culture was just too strong. Projects were failing miserably. Some failures were attributed to the lack of sponsorship or commitment from line managers. One project failed as the result of a project leader who failed to control scope. Each day the project would fall further behind because work was being added with very little regard for the project’s completion date. Project estimates were based upon a “gut feel” rather than upon sound quantitative data.
The delay in shipping dates was creating more and more frustration for the customers. The customers began assigning their own project managers as “watchdogs” to look out for their companies’ best interests. The primary function of these “watchdog” project managers was to ensure that the equipment purchased would be delivered on time and complete. This involvement by the customers was becoming more prominent than ever before. The president decided that action was needed to achieve some degree of excellence
- Where will the greatest resistance for excellence in project management come from?
- What plan should be developed for achieving excellence in project management?
- How long will it take to achieve some degree of excellence?
- Explain the potential risks to Macon if the customer’s experience with project management increases while Macon’s knowledge remains stagnant.
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